Property360 - National Digital Magazine - 7 October 2022

How to hold on to homeyouras interest rates cycle up

BY BONNY FOURIE bronwyn.fourie@inl.co.za

AND VIVIAN WARBY vivian.warby@inl.co.za

INTEREST rate hikes are putting financial pressure on homeowners, leaving many struggling to keep up with their home loan repayments and contemplating a forced sale.

The higher interest rate adds pressure to hard-hit households carrying debt and, after the rate hike of 75bp last month, even more will be felt.

However, there are ways to hold on to your status as a homeowner.

Adriaan Goslett, the regional director and CEO of Re/Max of Southern Africa, urged those who bought their homes on the edge of their affordability scale to do the necessary repayment calculations to make sure they can afford the higher repayments.

Consumers and homeowners have had to absorb an additional 2.75% increase since November 2021, says Seeff Property Group chairperson Samuel Seeff.

Some homeowners, who could face losing their homes, are considering their options,

including turning to their banks for assistance or selling.

For homeowners in this difficult position, banks and property experts say there are ways to help them either keep their homes or at least retain their titles as homeowners by downscaling to a more affordable property.

Six ways to survive these tough times:

1. Communicate Banks want to keep people in their homes and so encourage homeowners to contact them when they see they are approaching financial difficulty.

There are proactive measures to identify and assist customers who show signs of financial distress, irrespective of whether the customer has missed a payment.

Contact your banks or home loan providers as soon as you realise you are unable to make payment on your bond. Talk to your bank about the various assistance plans for customers

who are in distress.

All banks urge homeowners not to wait until the banks’ collections and recoveries team or department contacts you.

2. Enter into a new agreement If you, as a homeowner, find you are unable to pay the full instalment on your home loan, contact your home loan provider and inquire about arrangements that could be made.

Since each homeowner’s situation is different, it is important that you seek a way to move forward with the help of your financial institute.

If you are experiencing shortterm distress, you might even be able to negotiate a lower repayment for a short time while you get back on your feet.

The worst-case scenario with the financial crisis you are in being a long-term one, some banks will help you sell your property and find a more affordable home to move into.

Banks will look favourably on clients who contact them first, especially if homeowners confront the debt issue before it escalates.

Some initiatives to assist struggling home loan customers include restructuring payments, agreeing to interest-only payments

for a time or reducing instalments over a specific period.

3. Consider selling before it is too late

If none of the bank’s options are suitable, homeowners whose accounts are up to date could sell their properties privately or with the assistance of an estate agent.

Banks also have assisted sales programmes.

Experts advise you to speak to an experienced agent and get your house on the market. An agent will do their best to get you the best price for your home.

4. Debt-proof your home (those considering buying now)

Before you get to a stage of being pressured, here are some ways to help yourself before you buy a home:

• Pay a larger deposit: Making a bigger down payment will mean buyers will need a smaller home loan and can negotiate for better rates as they’re negotiating from a stronger position.

• Secure a lower interest rate:

When applying for a home loan, it’s generally a good idea to shop around to see what the different banks offer – negotiating a low interest rate (when possible) can do much to decrease costs on a

month-by-month basis.

• Pay a little extra each month: The more money you can pay into your home loan every month, the better. This can help reduce your loan term and help you pay off your home loan quicker. Even R500 extra a month can make a big difference. Homeowners can also consider making some extra money from their homes by renting out any extra space, agents say.

5. Refinance and consolidate debt

If you have owned your property for some time, you could have plenty of equity and a mortgage broker could consolidate your debts.

6. Consider downsizing or alternative ways of living

If you have more than one property, consider selling one of them.

Or you could find a smaller home in a cheaper neighbourhood and downsize.

You could even rent for a while, or move in with family or friends until you get on your feet. It is not the end of the road. Many people have made the move to alternative ways of living even moving into mobile homes and shared accommodation. And they have done so successfully.

Don’t panic, the interest rate storm will calm

BY BONNY FOURIE bronwyn.fourie@inl.co.za

SOUTH AFRICANS have been hit from all angles this year, with the latest “klap” being last month’s 0.75% interest rate hike – the second consecutive increase.

Homeowners and buyers in particular are panicking about whether they can afford to meet their monthly bond repayments, and stressing about rates continuing to climb.

Some are even worrying about whether the country’s prime lending rate will reach the all-time high of 1998’s 25.5%, and scrambling to set up contingency plans in case they do.

But for these South Africans, the expert advice is simple: chill.

FNB predicts that there will be one more interest rate increase, in November, of 0.5%. After that, the situation is expected to stabilise. Of course, one can never accurately predict the future or all the global events that may impact South Africa’s consumer price index (CPI), but the bank’s property sector strategist, John Loos, says it seems unlikely inflation will rise more.

“Only if inflation gets out of hand, can interest rates rise far higher than the current levels.

“But to create some kind of ‘hyperinflation’ would require far more ‘proinflation’ fiscal and monetary policies than the current ones in South Africa – Zimbabwe being the most recent example of extreme inflation in the southern Africa region.

“In the near term, inflation in South Africa doesn’t appear likely to get out of hand. Petrol prices have started coming down, and CPI inflation for August, at 7.6%, was slightly lower than the prior month’s 7.8%.”

Inflation and interest rates

Unpacking some scenarios, he says, hypothetically, that even if the petrol price were to remain the same over the next 12 months, that would ultimately lower yearon-year petrol price inflation to 0%. Even better though, petrol prices have started to come down.

The CPI is expected to slow again as a result, although food-price inflation has not turned the corner.

“It looks like we are hitting the peak, or are fairly close to reaching the peak of inflation. And, at FNB, we also believe that we are close to the peak of the prime rate. We think that there will be a 0.5% increase in November, but after that, the interest rate will move sideways.”

Loos does reiterate that predicting anything over the next two to five years is risky and there are “many scenarios” to consider but, ultimately, he believes the interest rate will peak at a 10.25% prime rate in 2023.

“That is FNB’s main scenario. Inflation appears to be peaking already.”

There are always risks to any forecast, and global politics could be key, especially in light of the tension between the West and China, and the West and Russia – which could lead to supply-chain disruptions.

Russia’s invasion of Ukraine and resultant

boycotts and sanctions caused disruptions of the world’s energy and food markets. And the tension is far from over.

There is also concern from some quarters that global supply disruptions could see global inflation remaining higher for longer, he explains.

“If inflation is elevated for long enough, then it risks staying higher for longer as inflation expectations anchor at higher levels, something the world’s central banks want to prevent.”

Generally, he says, it is “tough” to predict what will happen four to five years from now, “after all, we never dreamt of Covid in the months before it happened” but, at the moment, the near-term outlook for inflation, and therefore the interest rate, looks near to stabilising, especially with the petrol price coming down.

Samuel Seeff, the chairperson of the Seeff Property Group, adds that it is important to put the interest rate into perspective – it is not higher than what it was before the onset of the Covid-19 pandemic.

“We always knew that the rate would need to go up again, which means that there is no need to panic about the interest rate. In fact, the prime and base home loan rate was 10% in December 2019 and came down to 9.75% in January, just before the onset of the pandemic.

“It is important though that given the uncertainty that has crept into the economy and with the resurgence of Eskom’s power outages, property owners and prospective buyers ensure they are able to cope with the additional costs.”

Should you fix your home loan rate now?

These are Loos’s words of wisdom:

“I never advise anyone to fix their rates or not. That depends on each individual’s appetite for risk.

“But fixed rates aren’t a tool with which to try to beat the market. You fix your rates to sleep comfortably at night; you fix your rates to have certainty over a portion of your cash flow. And you live with your decision, knowing that you may ‘lose’ some and you may ‘win’ some, depending on where interest rates move to in future.

“The main reason for fixing rates is because the future is uncertain.”

Interestingly, he adds, even if you are inclined to fix your rates, you should probably expect to find less attractive fixed rates on offer in an interest-rate-hiking cycle.

Banks also need to hedge their risks against taking on a client’s floating rate, and they do so in the swop market where “forward rates” and market expectations, to a large extent, determine the fixed rate a bank can offer.

If the market expects interest rates to increase, as it often does when they are being hiked, fixed rates offered will often move higher.

“You get more attractive fixed rates when the interest rates are declining or at least expected to decline.”

Loos’s tip to buyers and homeowners: If you are keen on fixing your rates, the time

to look for more attractive fixed rates is often when interest rates are being cut or expected to be cut. Ironically though, this is normally the time when few people are looking to fix their rates.

As with any financial decision, Careen Mckinon and Kay Geldenhuys, of ooba Home Loans, say there are benefits and risks to fixing your rates. Households on tight budgets, with little potential income growth, could benefit in the long term from fixing their home loan rate, they say.

“And, if you are entering the market for the first time, the fixing of your rate could be a sensible option as it will provide you with protection from rate increases in the future.

The trick is taking the long-term view.

“If you believe that the interest rate will continue to go up, then it’s worth taking the short-term increase for the longer-term benefits. Right now, we are in an upward interest rate cycle, therefore borrowers should conduct a sensitivity analysis on what interest rate increase they are able to absorb.”

To sum it up, Mckinon and Geldenhuys say: “If it will give you peace of mind to be able to budget your repayments at a fixed rate into the future, then it’s a good time to fix. On the other hand, if you would like to continue to benefit from the low rate for as long as possible, and believe that the interest rate might come down in the longer term, then it’s best to wait it out, particularly if you are enjoying a

very attractive variable rate below the current prime lending rate.”

Carl Coetzee, the chief executive of BetterBond, says there is no simple answer when it comes to evaluating the benefits of a fixed or variable interest rate as each buyer’s financial situation and circumstances are different.

“While it can be reassuring having a fixed rate so that you know what your instalment will be over a fixed period, especially as interest rates rise, it could end up costing you more. A fixed rate is generally higher than a variable rate as it poses a greater risk to the bank.”

WHY SUSTAINABILITY SHOULD FACTOR INTO YOUR RETIREMENT LIVING DECISION

PET-FRIENDLY GARDEN HOMES FOR THE PRICE OF A FLAT

The Viognier complex is an exciting new release of 204 ground floor homes in the established Aan de Wijnlanden security lifestyle estate in the Stellenbosch Winelands

The climbing cost of utilities and load shedding are increasingly prompting people to seek out homes that are equipped with green and off-grid solutions

where to retire,

towards a more ‘eco-aware

considering sustainability when looking for a retirement home,” says Gus van der Spek, the owner of upmarket Cape Town retirement lifestyle village Wytham Estate.

THE DESIGNER Viognier two or three-bedroom homes will have an enclosed landscaped and lawned garden, and an enclosed braai on an open patio, ideal for the enjoyment of young and old (and pets). The solid side-wall boundaries of the homes are designed for privacy and safety. The magical Stellenbosch mountain views and fresh country air is a priceless asset that comes with every home purchase.

Modern homes with top class finishes and amenities

Access to all the Aan de Wijnlanden Estate facilities

Green solutions reduce reliance on the grid and may cut home expenses

Water-saving solutions like water-saving shower heads or rainwater collection systems.

Viognier residents will be able to enjoy the 50 hectare estate, including its modern clubhouse with its large entertainment area, kiddies’ clubhouse, tennis courts, equipped gymnasium, swimming pool kilometres of walking trails and a 5ha conservation area. The estate already provide for a 24 hour manned security team, a CCTV monitored system and biometric access control.

The homes are thoughtfully designed to maximise space, enhanced by increased ceiling heights throughout. The finishes include fitted kitchens with granite tops, a selection of floor tiles, and vinyl floorboard finishes. High end sanitaryware and tapware are included, and the kitchen will be fitted with a gas hob oven. The houses will all be wired in order to be invertor ready, allowing residents to provide their own power back up system, and easily connect to essential plugs and lighting. A central fibre network will ensure that every home is internet ready, with several internet providers to choose from.

The climbing cost of utilities such as water and electricity in South Africa, as well as the high incidence of load shedding, are increasingly prompting people who are retiring to seek out homes that are equipped with green and off-grid solutions.

Location and access

“This enables them to reduce their eco-footprint and their home expenses – a critical initiative for retirees who are trying to preserve their pension savings,” Van der Spek says “It’s not surprising that homes with

A good investment

Community recycling services or proximity to a recycling facility.

Competitive levy

SUSTAINABILITY AND RESILIENCE

GO HAND IN HAND

Viognier is centrally located, with easy access to Stellenbosch, Somerset West, Strand’s beaches and Cape Town International Airport. It’s set within minutes of some of the Western Cape’s best schools and universities.

gas they use. Groundwater from the estate will be used to irrigate landscaped areas on the common property

The competitive levy of only R1 400 a month covers all the costs of security, common property landscaping, estate management as well as normal sectional title costs.

When it comes to reducing one’s environmental impact and reliance on the national grid, Van der Spek takes a practical approach.

Prices and plans

“While our sustainability measures protect the environment, they go hand in hand with our efforts to ensure that residents will have access to alternative power and water supply.

All the homes have been planned and designed with economy of running costs and reduced maintenance in mind. Energy usage will be minimised by the provision of gas hobs and a central hot water system, allowing homeowners to pay only for the hot water and

of water, providing residents with water security. The construction of an on-site water treatment plant will ensure that groundwater sourced from the estate’s boreholes remains safe for drinking and irrigation. Noting the recent publication of the 2022 Blue Drop report (from the Department of Water and Sanitation), which documents the decline in the country’s water quality, the measure is fast becoming an essential consideration for South Africans.

There are four plans, with the two bedroom one bathroom home starting at R1 295 000, and the three bedroom two bathroom home from R1 595 000. The price includes VAT, a parking bay and transfer fees. Lock up garages are available for sale, and there is an option to enclose the patio with aluminum sliding doors.

“Our philosophy is that retirement should be enjoyed. It’s fitting then that Wytham Estate caters to the demands of a modern retiree, who believes in sustainable living for a sustainable lifestyle ”

Occupation of the homes will be from July 2023.

For further details visit viognier.aandewijnlanden.co.za or phone Nicho at 072 601 1772 or Hannes at 066 476 1890

PET-FRIENDLY GARDEN HOMES FOR THE PRICE OF A FLAT

PET-FRIENDLY GARDEN HOMES FOR THE PRICE OF A FLAT

The Viognier complex is an exciting new release of 204 ground floor homes in the established Aan de Wijnlanden security lifestyle estate in the Stellenbosch Winelands

The Viognier complex is an exciting new release of 204 ground floor homes in the established Aan de Wijnlanden security lifestyle estate in the Stellenbosch Winelands

THE DESIGNER Viognier two or three-bedroom homes will have an enclosed landscaped and lawned garden, and an enclosed braai on an open patio, ideal for the enjoyment of young and old (and pets). The solid side-wall boundaries of the homes are designed for privacy and safety. The magical Stellenbosch mountain views and fresh country air is a priceless asset that comes with every home purchase.

THE DESIGNER Viognier two or three-bedroom homes will have an enclosed landscaped and lawned garden, and an enclosed braai on an open patio, ideal for the enjoyment of young and old (and pets). The solid side-wall boundaries of the homes are designed for privacy and safety. The magical Stellenbosch mountain views and fresh country air is a priceless asset that comes with every home purchase.

Modern homes with top class finishes and amenities

Modern homes with top class finishes and amenities

The homes are thoughtfully designed to maximise space, enhanced by increased ceiling heights throughout. The finishes include fitted kitchens with granite tops, a selection of floor tiles, and vinyl floorboard finishes. High end sanitaryware and tapware are included, and the kitchen will be fitted with a gas hob oven. The houses will all be wired in order to be invertor ready, allowing residents to provide their own power back up system, and easily connect to essential plugs and lighting. A central fibre network will ensure that every home is internet ready, with several internet providers to choose from.

The homes are thoughtfully designed to maximise space, enhanced by increased ceiling heights throughout. The finishes include fitted kitchens with granite tops, a selection of floor tiles, and vinyl floorboard finishes. High end sanitaryware and tapware are included, and the kitchen will be fitted with a gas hob oven. The houses will all be wired in order to be invertor ready, allowing residents to provide their own power back up system, and easily connect to essential plugs and lighting. A central fibre network will ensure that every home is internet ready, with several internet providers to choose from.

Access to all the Aan de Wijnlanden Estate facilities

Access to all the Aan de Wijnlanden Estate facilities

Viognier residents will be able to enjoy the 50 hectare estate, including its modern clubhouse with its large entertainment area, kiddies’ clubhouse, tennis courts, equipped gymnasium, swimming pool, kilometres of walking trails and a 5ha conservation area. The estate already provide for a 24 hour manned security team, a CCTV monitored system and biometric access control.

Viognier residents will be able to enjoy the 50 hectare estate, including its modern clubhouse with its large entertainment area, kiddies’ clubhouse, tennis courts, equipped gymnasium, swimming pool kilometres of walking trails and a 5ha conservation area. The estate already provide for a 24 hour manned security team, a CCTV monitored system and biometric access control.

Location and access

Location and access

Viognier is centrally located, with easy access to Stellenbosch, Somerset West, Strand’s beaches and Cape Town International Airport. It’s set within minutes of some of the Western Cape’s best schools and universities.

Viognier is centrally located, with easy access to Stellenbosch, Somerset West, Strand’s beaches and Cape Town International Airport. It’s set within minutes of some of the Western Cape’s best schools and universities.

A good investment

A good investment

All the homes have been planned and designed with economy of running costs and reduced maintenance in mind. Energy usage will be minimised by the provision of gas hobs and a central hot water system, allowing homeowners to pay only for the hot water and

All the homes have been planned and designed with economy of running costs and reduced maintenance in mind. Energy usage will be minimised by the provision of gas hobs and a central hot water system, allowing homeowners to pay only for the hot water and

gas they use. Groundwater from the estate will be used to irrigate landscaped areas on the common property

gas they use. Groundwater from the estate will be used to irrigate landscaped areas on the common property

Competitive levy

Competitive levy

The competitive levy of only R1 400 a month covers all the costs of security, common property landscaping, estate management as well as normal sectional title costs.

The competitive levy of only R1 400 a month covers all the costs of security, common property landscaping, estate management as well as normal sectional title costs.

Prices and plans

Prices and plans

There are four plans, with the two bedroom one bathroom home starting at R1 295 000, and the three bedroom two bathroom home from R1 595 000. The price includes VAT, a parking bay and transfer fees. Lock up garages are available for sale, and there is an option to enclose the patio with aluminum sliding doors.

There are four plans, with the two bedroom one bathroom home starting at R1 295 000, and the three bedroom two bathroom home from R1 595 000. The price includes VAT, a parking bay and transfer fees. Lock up garages are available for sale, and there is an option to enclose the patio with aluminum sliding doors.

Occupation of the homes will be from July 2023.

Occupation of the homes will be from July 2023.

For further details visit viognier.aandewijnlanden.co.za or phone Nicho at 072 601 1772 or Hannes at 066 476 1890

For further details visit viognier.aandewijnlanden.co.za or phone Nicho at 072 601 1772 or Hannes at 066 476 1890.

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For more information or to book your personal appointment contact Quadrant Gardens Manager, Adam Munga on 021 205 8600 or email AMunga@cpoa.org.za • Wilderness Road, Claremont

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